Cambodia Seeks to Expand Growth, Boost Rural Incomes in Tonle Sap Basin

MANILA, PHILIPPINES - Cambodia will target sweeping new measures to boost incomes and livelihood opportunities for thousands of poor households in the Tonle Sap Basin region, in a bid to broaden the country’s economic base and address growing income disparities between urban and rural areas.

To aid the government’s goal, the Asian Development Bank’s (ADB) Board of Directors approved a loan and grant totaling $30.7 million for the Tonle Sap Poverty Reduction and Smallholder Development Project. Two of ADB’s development partners in Cambodia, the International Fund for Agricultural Development (IFAD), and the Government of Finland will also contribute a combined $19.1 million.

Cambodia’s economy has grown between 6%-10% in recent years, driven by the construction, garment and tourism industries. However, growth in the agriculture sector, which provides livelihoods for up to 85% of the population, has been uneven because of weak infrastructure, low productivity, a lack of access to markets and poorly developed rural financial services. The result is persistently high levels of rural poverty and food insecurity, with almost a third of rural households lacking sufficient food during each year.

The project will spur agricultural productivity and increase incomes for up to 2.5 million people in 630,000 households in the poor Tonle Sap Basin provinces of Banteay Meanchey, Kampong Cham, Kampong Thom and Siem Reap. It will fund new or upgraded infrastructure, which is likely to include small-scale waterworks for irrigation and flood control systems, and improved farm-to-market roads. In addition the project will help to establish commune-based livelihood improvement groups that will provide revolving funds to members to buy agricultural supplies such as seeds and fertilizers. Support will be given to build up the capabilities of microfinance institutions and rural service agencies, to train farmers in modern agriculture technologies, and to boost access to information through internet centers or e-kiosks that can be utilized by commune members.

“The project will deliver a broad range of benefits including increased crop productivity and output, improved post-harvest management, market access and prices, greater access to rural financial services, and increased knowledge of agriculture technologies, all of which will help raise living standards, boost incomes, and provide livelihood opportunities for poor households,” said Ian Makin, Senior Water Resources Management Specialist with ADB’s Southeast Asia Department.

It is also part of a broader ADB-led initiative to develop the Tonle Sap Basin, and complements the work of other development partners in the agriculture sector, including IFAD.

The project is strongly focused on providing grass roots support for individual communities, who will be fully involved in identifying priority investments that reflect their specific needs. It also includes a gender action plan to ensure women are able to participate fully and to benefit equitably from the project.

ADB’s funds from its concessional Asian Development Fund make up 55.5% of the total project cost of $55.3 million and include a loan equivalent to $3.4 million, and a grant of up to $27.3 million. The loan has a 32-year term, including a grace period of eight years, with interest charged at 1% per annum during the grace period and 1.5% for the rest of the term. IFAD’s loan and grant of up to $13.38 million, and Government of Finland’s grant of $5.75 million equivalent will be administered by ADB, with the Government of Cambodia providing $5.47 million to make up the balance of the total.

The Ministry of Agriculture, Forestry and Fisheries is the executing agency for the project, which is due for completion around August 2017.